00;00;00;17 - 00;00;21;19 Unknown Hello, and welcome to another episode of the accounting for California podcast. My name is David Hemphill, the information and planning officer here at the California Board of Accountancy. And, once again, I'm very pleased to be joined by Mr. Dominic Frenzel, the executive officer of the CBA, and Miss Denise Fleming, the president and CEO of the California Society of Certified Public Accountants. 00;00;21;19 - 00;00;51;12 Unknown So glad to be here. Thanks for joining us. And we're going to talk about Assembly Bill 1175. Now, when we got together last time in late October, all of this was bubbling and getting started. They were proposals, but a lot has happened since then. And, we're thankful to say that Assembly member Jackie Irwin has officially introduced the legislation, which is known as Assembly Bill 1175, and that is to enhance the CPA licensure requirements and modernize mobility. 00;00;51;15 - 00;01;11;02 Unknown So let's just jump right in. Let's start with you, Dominic. So what is the basic structure of that bill. And I know last time you kind of referred to it as the box that we get started with. So tell us what's in there. Thanks, David. Yeah I think I think the box does provide a reasonably good metaphor for what we were trying to accomplish. 00;01;11;02 - 00;01;34;03 Unknown And I think the board working with the CPA did a really fantastic job of creating, a well-developed set of statutes that allow for flexibility to be seen both at the launch of, the new requirements. But as time progresses, we'll provide the needed flexibility to adjust with the changing times. And the bill creates flexible license requirements, as you said, and modernizes mobility. 00;01;34;05 - 00;02;16;09 Unknown And for those who actually take the time to review the bill, tax bill, you'll see some overall pieces and restructure to various sections to better group concepts together, such as the education and experience requirements to make it an easier read, an easier to follow. And, we're working to develop that language. We took a very methodical approach. The licensing division staff, especially, Michelle Center, and her team did a really good job to create kind of the walls of the box, to set the important and what are considered as are the necessary minimum requirements, while providing the CBA that kind of ability to work with stakeholders on council pay, with academia, with 00;02;16;09 - 00;02;41;23 Unknown the profession at large, to implement the more specific requirements, through the regulatory process. As that time progresses, and again, it'll just allow for that greater flexibility over and over time. So the boxes big enough, but not so big that it's kind of unwieldy. So what is the reaction been from your membership, Denise, about these proposed changes 00;02;41;26 - 00;03;09;00 Unknown It's been supportive, I would say, throughout our entire process. We had a I mentioned last time, a California advisory pipeline group, and that group was consisted of or is consistent because we still have these individuals together. It's large from small firms, faculty. The CBA was the advisor. So we're hearing positive support throughout the process. From the comment letters, to today, also from our board. 00;03;09;02 - 00;03;33;29 Unknown And I would say to, we're seeing that they're extremely happy to see the mobility and the practice privileges across the states being, maintained and that they're being focused on that also broadening the pathways. That's been something that's been a conversation, for many, many years, honestly. And how do we open up the profession a bit more to the nontraditional students that are out there 00;03;34;01 - 00;03;47;28 Unknown So there's a lot of positivity there and movement. We have had questions regarding lowering the standards. So to be honest, that's been out there, you know, ever since we started having conversations. And we keep saying that, you know, we are we still have that accounting concentration 00;03;48;09 - 00;03;49;11 Unknown And the 00;03;49;11 - 00;03;54;08 Unknown exam is that foundational right bar that everyone has to take. 00;03;54;08 - 00;04;16;01 Unknown And that does make sure that there's integrity in the content and quality. And there has been the new exam that was released this year that looks at the content from the marketplace and what the need is up there to be successful and, to really come in with that, that, beginning foundational content. So, that's there and that's the conversations that we've been having. 00;04;16;01 - 00;04;34;16 Unknown I know we had that dominate that conversation from but we started having these discussions and I said, do you have some resources on your website that you want to that people could take advantage of for that And there's also the CBA website, but we do there's resources on there. There's also a section where you can add your comments. 00;04;34;16 - 00;05;00;06 Unknown So, we've had comments come through customer service that were dressing. And if you have comments or questions, please put those on our website, go in and, and make sure that you, you know, provide those because we want to hear from you. Absolutely. Yeah. Now, Dominic, some people are trying to say is, is this a new pathway or are we enhancing a current pathway because we'll still have the the original legacy pathway. 00;05;00;06 - 00;05;37;29 Unknown So how do you like to refer to all of this Honestly, I'm kind of moving off this idea of pathway. We didn't establish similar in a similar way that maybe other states didn't really continue to create, continue to keep 150 semester unit pathway, a bachelor's into pathway. We took a pretty different approach to that, concept and really just set a standard, you know, the floor for the requirements, bachelor's degree with an accounting concentration, the passage of the CPA exam and then a two year general experience requirement. 00;05;38;02 - 00;06;01;05 Unknown And it's not really looking back to what we had before or looking to what we have now. There there's obviously some similarities there, but we look at it as more of having the flexibility within that structure for how somebody may be able to how an aspiring CPA can meet those requirements. And so let me just provide maybe an example. 00;06;01;05 - 00;06;31;23 Unknown And I ran this through, our licensees, some more knowledgeable about this than I am just to make sure I was marching down the right path. So an example could be some an individual who has an advanced degree, say a master's in public accounting. And even more, let's just say an individual earned that degree from a recognized, that the degree is recognized by the CPA, which this legislation, will allow the CPA to do this kind of expressway mentality for the accounting concentration. 00;06;31;26 - 00;07;10;10 Unknown And in doing so, by completing that degree from the record that the degree is recognized by the CPA, this aspiring CPA will have meet the degree requirement, obviously will meet the accounting concentration requirement by virtue of that recognized degree and will be able to substitute one year general accounting experience. So it looks similar to what, the legacy pathway will continue to offer, but is really built under this idea of here's a foundation set requirements, and there may be just certain ways that people can meet certain things along the way that creates that flexibility to the type of degree, the expressway that substituting a year of experience. 00;07;10;12 - 00;07;29;10 Unknown So I don't look at it as having multiple pathways. It's one set of requirements, but hopefully a significant amount of flexibility. But it's still simple to understand because if you get too many pathways, you get too much flexibility. It becomes very difficult to, kind of follow a map. So we're trying to be very conscious of that as well. 00;07;29;12 - 00;07;51;17 Unknown So I'll go ahead. I was just going to say, I mean, to me that's really future proofing what we're doing here. Right. Have that flexibility to add in or flex as new programs or kids come into place. You're being proactive in allowing for that rather than having multiple different pathways right 00;07;52;02 - 00;08;14;22 Unknown I kind of let's just say that it's impossible. Impossible. Yeah. No, it really is. I kind of wanted to go down that path a little further, though. I'm sorry. Path. I don't want to say pathway anymore, but because we're using both legislation and regulation to accomplish these, and I know there's probably a lot of people out there who don't really understand what the difference is between those. 00;08;14;22 - 00;08;40;02 Unknown So maybe explain why it's beneficial to use a combination of both, and maybe just sprinkle in a little bit of, what that what they each mean. Sure. Again, I hope I'm going to get hit over the head with it a lot, but the box, when you're looking at the legislation, it's a perfectly good tool to provide both a high level or a very specific, set about very specific requirements. 00;08;40;02 - 00;09;02;02 Unknown You can do you can do both. But if you use solely legislation to do that and create a very specific approach within the legislation, it'll require a legislative solution every time there's really a depending on the level of change, even a minor change could require us to go back to the legislature to, update or modify those those requirements. 00;09;02;05 - 00;09;40;09 Unknown But conversely, the legislation can also just create a structure and defines how an agency such as our board, could basically further define what's inside of that structure and provides a more evergreen approach. So to your question, the second part of your question, the legislation part of that requires the legislature finding an author, doing everything we're doing right now, to implement a change, whereas a regulation, as long as the legislation or the statutes provide the framework to do it, you can as the agency in this case, the board, go through what's called a rulemaking process. 00;09;40;11 - 00;09;41;29 Unknown And work with stakeholders 00;09;42;06 - 00;09;53;16 Unknown to make substantive changes to your requirements. And that's kind of the approach that we work with. Senator, Assembly Member Irwin's office on when she introduced 00;09;53;16 - 00;10;04;21 Unknown AB 1175. And the bill creates the structure and gives guidance to the board on how to kind of fill that structure. And that route making process is what we'll be doing 00;10;04;21 - 00;10;13;08 Unknown and create that. The actual substance of those requirements. Yeah, I think that's an important point that so the legislation has been introduced, 00;10;13;08 - 00;10;22;23 Unknown But now what may be included in the regulations is going to be discussed and eventually drafted in the upcoming months in preparation for the rulemaking process, 00;10;22;23 - 00;10;41;12 Unknown which will begin once the bill becomes law. I wanted to take a moment here, though, to make sure everyone understands that the conversations being had now are policy discussions and direction for what could be included when the actual regulatory or rulemaking process will begin later this year. 00;10;41;23 - 00;10;46;10 Unknown That process does allow a time window for public comment. 00;10;46;10 - 00;10;58;05 Unknown Leading up to that, the CBA has already begun discussing, started in January, potential subject areas and unit requirements for the accounting concentration part of the regulations. 00;10;58;08 - 00;11;27;01 Unknown This was presented after gathering feedback from stakeholders. And, Dominic, I'll have you talk about this a little more in a second. But the CBA gave direction to draft regulations, which would require 24 units in accounting subjects, 24 units in business related subjects, and three units in accounting or business ethics. To make up the accounting concentration called for as part of the bachelor's degree requirement coming up in May and July at those CBA meetings. 00;11;27;04 - 00;11;57;13 Unknown The CBA will be presented with the results of more stakeholder feedback regarding which accounting related degrees and certificates should be allowed to substitute for general accounting experience, and a process and criteria for recognizing specific accounting degrees for the transcript review. Expressway. Now, like I mentioned, these board meetings are great opportunities for stakeholders to give their input. Remember, the CBA wants to hear from you whether you agree with the recommendation or not. 00;11;57;16 - 00;12;03;06 Unknown It is important that you take this opportunity for involvement in the future of your profession. 00;12;03;06 - 00;12;22;09 Unknown We anticipate the final draft regulations to be brought to the CBA for action in September, so the rulemaking process can begin when the bill becomes law right around. Shortly after that probably. Remember, it is these regulations that are the official vehicle for filling the box, like Dominic likes to refer to. 00;12;22;09 - 00;12;30;01 Unknown So, Denise, we have a better idea now what it's going to be. If it becomes law, can you share with us what what those time frames are 00;12;30;01 - 00;12;35;11 Unknown The dates are for the automatic mobility would be January 1st, 2026. 00;12;35;13 - 00;13;00;13 Unknown And then for the pathway that would be July 1st, 2026. And then the legacy pathways right would be in place until January 1st, 2028. Looking at Domini 2029, 2020, the end of 2028 beginning. Yeah. Thank you. Yeah. Yep. Dates there. Yeah. But again the dates information is on the website. So it will be in front of you all the time. 00;13;00;16 - 00;13;19;16 Unknown And we'll be trying to keep up to date on our resources. Yeah. Yeah. We have a full timeline right now on the CBA website with there's a lot going on on that timeline. So right now we're kind of in the legislative process. And if you know, if things go according to plan, then the bill will be passed to the governor's desk, hopefully at some point in September, and he'll have 30 days to sign. 00;13;19;16 - 00;13;29;15 Unknown So this year, you know, hopefully for the passage of the bill. And then, as Denise said, January 1st, 2026, it would officially kick in at least the mobility part. 00;13;29;15 - 00;13;39;26 Unknown Then there's a little bit there's kind of a six month implementation window, that we're looking at before we jump in, which just gives us more time to do more podcasts. 00;13;39;26 - 00;13;56;26 Unknown Right. And spread the word a little more and just make sure everyone is ready and on the same page about these, these potential still upcoming changes will be a lot of questions. To your point. I mean, it's complex, as you heard from Dominic. It is. And so we have I think you have I think who's on your site. 00;13;56;26 - 00;14;17;23 Unknown You have different recordings as well. I would encourage all of you, I hate to keep talking about the websites, but to go on there, get the information because it's their FAQ use and as we have questions coming in, we will also provide, answers in response to this question. Absolutely. Yeah. And we even have, a web page that we put up last week with you can even go in. 00;14;17;23 - 00;14;35;01 Unknown There's even timestamps to all of the discussions leading up to this point at the really the last two years of CBA meeting. So you can really go down the rabbit hole if you'd like. You did the timestamps on there. Yeah. See, we try to help. We're not going to make you sit through an entire for our video, you know. 00;14;35;01 - 00;15;15;09 Unknown Come on. We're here. We're here to help you. So so that's as far as the legislation now looking at the regulations that are getting started, can you kind of walk us through what we potentially have lined up for the year What what's kind of the time frame for those Yeah. So as soon as, even before the bill was introduced back in January, we actually launched into this, process, looking at the bill language and determining what areas of the bill would likely or would be required to have regulations in order to implement the provisions, especially with the aggressive timeline of July 1st, 2026 for the licensure requirements. 00;15;15;11 - 00;15;40;13 Unknown And so, back in January, the board started looking at, the accounting concentration, what that would mean. And it was that's kind of the foundational piece that takes us to the next steps of looking at recognize degrees or, substituting years of experience, a year of experience for, an advanced degree or maybe some amount of time for a certificate or training program as those come online. 00;15;40;13 - 00;16;13;16 Unknown So I would anticipate, well, we don't have anything for our meeting later this month on this particular topic in May and in July and again in September. You know, there will be this ongoing discussion of refining those regulations. So as individuals have questions for they want to be more actively involved in the development of the process. Those are their opportunities for our board meetings to kind of effect change or get their information before the board so people can understand our so members can understand how to craft those regulations appropriately. 00;16;13;18 - 00;16;16;02 Unknown A lot of opportunities for feedback. Yeah. 00;16;16;02 - 00;16;23;27 Unknown So the the 150 unit requirement, which is current, you know, part of the current pathway is essentially going away. 00;16;24;02 - 00;16;46;03 Unknown So there is that element about that potential fifth year of education now kind of being replaced with an additional year of experience. How do you see that affecting the students and ultimately the pool of candidates that will be looking to achieve their license Well, I mean, there's a key barrier, right, that we have, that we're eliminating. And so that's a positive. 00;16;46;03 - 00;17;05;14 Unknown And I know a number of the students have said, well, that makes it just so much more achievable for me. Especially it opens the door up for nontraditional students. And we're seeing more and more students that are second career. That's and oh the career that I saw it I want and it really doesn't make sense for me. 00;17;05;16 - 00;17;26;14 Unknown I want something that's different and that's definitely more stable. And accounting is one of those careers. So we're seeing more and more second career and that definitely when they're working, this allows an opportunity for them to come in. I would say to from a competitive standpoint, you don't have those students that are saying, oh, I want to opt out because data analytics is for years. 00;17;26;14 - 00;17;43;21 Unknown And now I have this fifth year, right So it allows the I think the playing field to be a little bit more level. I know there's a study out there and there's a lot of studies. Right. But there's one by MIT and said one, the 150 was brought in. There was a 14% decrease, right, in, students that were coming in. 00;17;43;27 - 00;18;02;17 Unknown And, you know, if it's ten, 14 or whatever, it still meant that there was a barrier that was created and so we're seeing that being eliminated. Now, I will say we've said this many times. It's not a silver bullet. There's other barriers we have, whether it's balancing personal life or professional salaries, you know what it may be 00;18;02;22 - 00;18;21;03 Unknown It's still those are there. So we have to work on those. And we are working on those, and awareness and what a CPA really does. But this starts just eliminates that initial barrier, gets there and allows her to be other conversations about other things that we need to work on. So I'm seeing a lot of positives. 00;18;21;05 - 00;18;48;22 Unknown And I will say to just there being more a system that's more understandable. We're not changing the rigor, just making sure that you can understand it and and not be so convoluted that you say, I'm all right. There's a positive there, right I like that the kind of the leveling, the playing field, that right now that's important. Let's discuss the mobility portion of this a little bit, which we haven't gotten into yet. 00;18;48;22 - 00;19;13;10 Unknown So moving towards now a more open mobility program. So in November, at the meeting, the CBA discussed removing the term substantial equivalency in how California will look at other states to determine if their CPAs can practice without notice here in California. So tell us about that shift. And then how will the CBA continue protecting California consumers moving forward if it passes 00;19;13;13 - 00;19;48;20 Unknown Yeah, absolutely. So the term substantial equivalency kind of got embedded in both the mobility for practice privilege provisions that exist, but also kind of integrates itself into our licensure requirements and is a national kind of term, to evaluate states across lines for their licensure requirements. But the equivalency was really based off of 150 semester units. The exam and the one year experience were really that the idea of substantial kind of was kind of lost a little bit in that discussion of how that should be equated out. 00;19;48;22 - 00;20;08;14 Unknown So our board took a shift and is now using a term, here called comparable Licensure model, where it's now kind of looking at do you have a degree as a requirement for education on specific units How many units make up those pieces, understanding that that might be something that the state has an interest in and that the state has an interest and that we may not. 00;20;08;14 - 00;20;35;07 Unknown But is there a degree that you're requiring some type of an accounting concentration, or do you require the passage of exam and do you have an experience requirements Comparable licensure model is going to be more than common term, but as it's practically used for mobility purposes in terms of safeguarding consumers, really nothing changed. All it did was no longer apply that term for how you entered the state. 00;20;35;09 - 00;21;05;28 Unknown And rely on CPA or CPA for purposes of entering practicing. But for the board to maintain this level of, authority, to manage its, consumer protection requirements by saying, okay, well, as I look at state A, B, or C, and they've now dropped it below and it's like you no longer required bachelor's degree, the board has an ability to react and remove those, automatic CPA or CPA rights to individuals coming from those states. 00;21;06;01 - 00;21;36;16 Unknown So functionally, I don't think it really changes much. We still have all these California significant guardrails, an ability to effect change to make sure that consumers here are protected. It's just redefining and providing a better definition and a more manageable definition of how to evaluate another state, rather than using substantial equivalency and leaning into maybe a national, model of it is saying comparable and letting the Board of Counsel define what that meant for purposes of coming in and out of state. 00;21;36;18 - 00;21;59;20 Unknown It's still right on the onus of the individual, the firm's right to know the regulations when they come in and to make sure they are seeing. Right. So, I mean, that's all the same, as you said. So what would happen to an individual from said bad state if that ever happens Are they completely excluded from California or do they have an individual way in 00;21;59;22 - 00;22;22;03 Unknown No, they aren't. The idea is not to stop, qualified individuals from coming in. The simplicity of CPA, equal CPA from state, looking at the state just creates a level of simplicity. I can just say state aid can come. But if we were ever to say state aid, likes to requirements and it could potentially pose a risk of consumer protection, then it doesn't shift to the individual. 00;22;22;03 - 00;22;45;25 Unknown And there's a notification requirements no longer under there's no notice requirement. It moves to notification requirement. But it doesn't interrupt that ability to service the clients here and those clients to continue to rely on that individual. And as Denise said, the onus still lands on that CPA or that firm to understand that that requirement may exist if, done state was kind of removed from the CPA. 00;22;45;25 - 00;23;04;03 Unknown The CPA model provides the notification right now. Does it have a fee with it It's something simple to do. I think it's 1 or 2 pages just to provide some general information. How are you qualified And you're right back into, kind of practicing. It's just taking a one. No, no, this piece away if I were ever get there. 00;23;04;06 - 00;23;22;10 Unknown And let's just hope it doesn't kind of get to that point. But we do have a mechanism, a backstop for both the CPA and the client to make sure that it doesn't interrupt or too much. I thought in closing, we could just kind of discuss maybe the national wins and what's going on, because California's certainly not going out there. 00;23;22;15 - 00;23;40;05 Unknown You know, on our own, everything we've done up to this point has been very collaborative that we kind of discussed in the first podcast. But, what have you noticed I'll pose this to both of you. I'll start with you. Denise. What have you noticed nationally about the progress from other states and pursuing things similar to this 00;23;40;07 - 00;24;04;28 Unknown As you said, there's been a lot of collaboration. We didn't get to this point without talking, collaborating, having common tenets that we're focused on. That's all been in the works for the last year. There's a number of states, and I can speak to that more in detail, but there's many states over 30 that are headed down this path, down a very, very similar path and keeping at the same time frame. 00;24;04;28 - 00;24;27;21 Unknown Two. Right. So we've all kind of worked together, a lot of respect there and trust to, to work together. So we've spent, phenomenal as far as the conversations that we've been able to have, but without having that, trust and the opportunity to work together before this, probably wouldn't have happened. But it's it's really, come together quickly. 00;24;27;21 - 00;25;01;08 Unknown I would say, quickly. The and I thought, yeah, I agree. And I mean, what we're seeing nationally is we're not we definitely were the first and we're not we're not going to be the last to have introduced legislation this year. And in some states, it's already passed. There kind of maybe multiple pathway and open mobility or some states are only going after mobility and meeting their, licensure requirements intact, but they're trying to be reactive and proactive in some instances to make sure mobility is not interrupted too much. 00;25;01;11 - 00;25;24;00 Unknown And, and, that, that cross-border practice can continue. But like I said, I think I know two states have already passed their legislation. One has been signed in, one is awaiting the governor's signature. And we'll probably go here and this month and maybe even by name for a couple of other states to have a much quicker legislative process, where they stand. 00;25;24;00 - 00;26;05;27 Unknown So, I fully anticipate you're going to see a rush this year and again next year for those legislators who meet every other year, and they're not in their legislative year to be doing something because some states are waiting to have an opportunity to wait and see how the the lay of the land kind of falls. But everybody, from what I've seen is moving down a more redefined mobility or automatic mobility kind of model, and either doing that by itself or combining them with licensure requirements that are similar, comparable what what we've done, whether or not they're creating three pathways, two pathways, doing something similar to what we are doing here, that it's 00;26;05;27 - 00;26;30;25 Unknown kind of all over the place, but everybody feels comfortable in the direction is kind of going, I think because it's setting the bar to be a kind of concentration. That's two years experience. Across the across the States, I've been introducing things. All right. Well, these are certainly exciting times for the profession and especially for those that are soon to be entering the profession. 00;26;30;25 - 00;26;52;10 Unknown And we promise we'll do our best to, continue coming together and having these conversations as these changes are made. The these are these are major changes, and we're going to do our best to make sure they're, communicated as best as possible to everyone. So with that, I encourage you to follow us on our social media, if you don't already, LinkedIn x, Facebook and even Instagram. 00;26;52;10 - 00;27;11;29 Unknown So you can find a CBA news do that. And then of course Cal CPA as well. They'll get out some great information for their members. And you know, so as this is changing going through this year, getting hopefully approved and then once next year rolls around and the implementation begins, it'll be important to keep up that dialog. So please follow us on social. 00;27;11;29 - 00;27;30;20 Unknown Go to that web page that we created. Cbc.ca dot gov. Click right on the front right there you see Assembly Bill 1175. And there's a lot of great information there, including a lot of background information for you to, to go down that rabbit hole as we talked about. So thank you again, Denise, very much for joining us. 00;27;30;20 - 00;27;43;06 Unknown And best of luck to, all of your members. Thank you again, Dominic, and thank you all for viewing and or listening to this episode of the accounting for, accounting for California podcast. Until next time. Bye bye.